Many contractors are asking what happened to Home Star, the proposed legislation that would have extended rebates to homeowners who invested in energy efficiency upgrades for their homes. While the bill was a hot topic for much of 2010, it ultimately failed to pass in the Senate, and has not been reintroduced in Congress so far in 2011.

This article includes a brief history of the legislation and explanations from industry members as to why it did not become law last year. However, the Obama administration has recently begun to tout the Home Star program, and there’s a chance it may return to the Hill. Yet industry leaders are also looking to alternatives to aid the HVAC industry.

HOME STAR HISTORY

While various versions of the Home Star bill were introduced in Congress, the most significant was House Resolution 5019, known as the Home Star Energy Retrofit Act of 2010. H.R. 5019 was introduced in the House in mid-April 2010. It was sponsored by Rep. Peter Welch, D-Vt., and included 44 cosponsors.

This version of the Home Star legislation would have created a program to provide $6 billion in rebates to homeowners who upgraded the energy efficiency of their houses through measures ranging from attic insulation to furnace replacement. It was structured as a two-tiered system with the lower tier providing money for simple replacements and upgrades, and the higher tier providing more money for homeowners who undertook whole-house renovations for energy reductions.

The Silver Star portion of the program, which offered a maximum rebate of $3,000, would have given rebates for smaller-scale projects, such as air sealing and replacing old heating/cooling equipment with new high-efficiency models. The Gold Star rebates, which would have maxed out at $8,000, were intended for whole-house energy reduction and would have required software simulations comparing the energy use of a home before and after retrofits.

The House passed this bill on May 6, 2010, by a 264-161 vote. After the House passed its version of the bill, it was referred to the Senate.

During this phase of the legislative process, many in the industry raised concerns about certain aspects of the bill. Specifically, the Air Conditioning Contractors of America (ACCA) expressed its disapproval of the bill’s accreditation requirements for contractors. In order to perform the whole-home retrofit work under the Gold Star portion of the program, Home Star would have required contractors to be accredited by the Building Performance Institute (BPI) or an equivalent alternative certification. In response, ACCA announced it could not endorse Home Star because of the limited number of contractors eligible nationwide to perform Gold Star work. Others in the industry pointed out that the bill did allow for alternatives to BPI certification, and asserted that the bill would aid the industry overall.

While the Senate did not immediately choose to consider the bill, in late July, Majority Leader Harry Reid, D-Nev., included a version of the Home Star bill in a larger energy package known as the “spill bill.” This Senate bill, S. 3663, was more far-reaching and included a response to the BP oil spill.

However, the Senate version of the bill was also controversial because of the way it proposed to handle the rebate process. While the House version of the bill sent the rebate money directly to the consumer, the Senate version of the bill required contractors to apply for the rebates after performing the work.

Ultimately, although the bill was read in the Senate and vigorously debated in the HVAC and home performance industries, it was referred to committee and never brought to the Senate floor for a vote.

WHY HOME STAR FAILED

Many in the industry have noted that the political dynamics on the Hill led to the bill’s failure. “From a politics standpoint in the Senate, it was very difficult to move any legislation last year, especially standalone bills,” said Matt Golden, president of Recurve (San Francisco) and policy chair for the home performance trade association Efficiency First. “We [Home Star] were in the spill bill, and the spill bill didn’t pass. At the end, we were at the mercy of Senate politics.”

According to Dale Harbour, vice president and general counsel, Residential Solutions, Ingersoll Rand, the biggest roadblocks to Home Star’s passage were money and timing.

“It was really a jobs program, and it was something that had been introduced by a Democratic-controlled Congress prior to the [mid-term] election, and it had some level of bipartisan support,” he explained. But, he said, “Its biggest issue was that there was not a mechanism to pay for it.”

Because the bill was not deficit-neutral and did not include corresponding cuts to allow for the funding of the Home Star rebates, Harbour said, “It never gained any traction in the Senate.” He continued, “It was more of a timing issue than anything else in terms of when that was introduced. It was relatively late in the game, and it was at a point in time where there were questions about the extent of the success of the stimulus package that was passed in the very early tenure of [the Obama] administration.”

WHAT'S NEXT?

Since Home Star failed to pass in the Senate last year, it was never sent to the president’s desk to be signed into law. However, this year President Obama has again called attention to the proposed program. Following his State of the Union address in late January, the White House issued a press release that promoted the Home Star program as a way to protect consumers against rising energy bills. The president then included funding for Home Star in his budget proposal for fiscal year 2012. According to the White House, Home Star is intended to be part of the president’s larger goal to establish a Clean Energy Standard (CES) for the country.

Despite the Obama administration’s promotion of the program, some doubt that Home Star would be well received in Congress this year. The main reason is that the bill carries a $6 billion price tag, and the new focus on the Hill is centered on fiscal responsibility.

“The Home Star program as originally proposed had strong financial incentives to upgrade the energy efficiency of homes. As such, it was also a very expensive program. While it may be an effective job creator, for it to have a good chance of passage, in my opinion it will require mechanisms to pay for the program that are at least deficit neutral,” Harbour said. “Without corresponding spending cuts, I think it faces an uphill battle in a Congress increasingly focused on deficit reduction.”

According to Golden, many in the industry are now moving ahead with other initiatives. “We continue to look at a number of possible options to help this industry in Congress,” he said. As an example, he cited the Department of Housing and Urban Development’s (HUD) PowerSaver loan. The loans made available by this pilot program are backed by the Federal Housing Administration (FHA) and offer credit-worthy borrowers low-cost loans to make energy-saving improvements to their homes. “We are engaged in making it a more contractor-friendly product,” Golden said.

In terms of larger bills to support the industry, Golden said there may be a chance for a jobs bill. “We need to have help for construction,” he said. “We’re still at 20.7 percent unemployment and getting worse, and that’s really why the president is still looking at it.”

He continued, “All I can say at this point is there’s a feeling on the Hill that something needs to done for construction and manufacturing. There are aspects of the construction industry that are economically depressed - working together, with Congress, we can turn around those economics with sound policy and get people back to work building better buildings.”

Whether Home Star is reintroduced in Congress or other alternatives are proposed to aid the industry, there is no doubt that energy efficiency will continue to stay in the limelight. Contractors who prepare by achieving and updating their third-party certifications, and by working with third-party verification providers, will be well equipped to take advantage of any new initiatives in the future.

Publication date: 02/28/2011